SALES CHARGE Meaning and
Definition
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Sales charge, also known as a sales load or front-end load, is a fee or commission charged by an investment company, broker, or financial institution when purchasing shares of a mutual fund or other investment product. It is typically a percentage of the total amount invested and is deducted upfront at the time of the purchase.
The purpose of a sales charge is to compensate the financial intermediary or salesperson for their services and advice in helping the investor select and acquire the investment product. It is a common way for distributors, such as brokers or financial advisors, to generate revenue and cover their expenses.
The sales charge can vary depending on the investment product and the distribution channel through which it is purchased. Typically, the sales charge for mutual funds ranges from 3% to 5%, but it can go higher for certain types of funds or share classes. The charge may be structured to decline over time, known as a declining-load, or it may be a fixed percentage. Some funds offer breakpoints, which reduce the sales charge for larger investments.
It is important for investors to understand the sales charge as it directly affects the amount of their initial investment. This charge is distinct from other investment costs, such as management fees or ongoing expenses to maintain the fund. Investors should consider the sales charge along with other factors, such as performance history, risk levels, and investment objectives, when selecting an investment product.
Common Misspellings for SALES CHARGE
- sales charg
- aales charge
- zales charge
- xales charge
- dales charge
- eales charge
- wales charge
- szles charge
- ssles charge
- swles charge
- sqles charge
- sakes charge
- sapes charge
- saoes charge
- salws charge
- salss charge
- salds charge
- salrs charge
- sal4s charge
- sal3s charge
Etymology of SALES CHARGE
The word "sales charge" is derived from two separate etymological sources.
1. Sales: The word "sales" comes from the Middle English word "sāle" or "sale", which dates back to the early 13th century. It was borrowed from the Old Norse word "sala", meaning "a sale" or "a selling". The Old Norse term itself originated from the Proto-Germanic word "*salą", belonging to the larger Indo-European language family. The concept of the sale of goods or services has been a fundamental aspect of economic transactions throughout history.
2. Charge: The word "charge" stems from the Old French word "charger", which meant "to load" or "to burden". It can be traced back to the Latin word "carricare", meaning "to load".
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